October 29, 2012

Roads to Mandalay

India’s Look East policy, now an article of faith among foreign policy practitioners in Delhi, has always suffered from the constraints of geography. Although India’s engagements with peninsular Southeast Asia — particularly Singapore, Malaysia and Thailand — have improved considerably over the past two decades, the absence of direct road and rail networks has limited its presence in the region. Several members of ASEAN, including Singapore, Thailand, and Vietnam, have become increasingly vocal about their desire to see an enhanced Indian presence as a healthy balance to Chinese influence. Additionally, as India elevates its commercial relationship with China, it remains wary of compromising its security by establishing a direct transportation corridor that traverses the disputed boundary. And the recent violence in Assam, among other developments in the region, highlights the urgent need to assist India’s Northeast in reaping the full benefits of the country’s rapid economic growth.

The gradual political and economic opening of Myanmar under Thein Sein offers India a rare opportunity to address all of these challenges simultaneously. But it would require New Delhi to act fast. The seventh East Asia Summit in Phnom Penh offers the ideal opportunity to unveil Indian intentions and engage all the relevant stakeholders.

Myanmar and the Northeast stand at the crossroads of three of the most vibrant economic regions in Asia — China, India, and the ASEAN. But along with Bangladesh, they constitute one of the worst-connected and least-developed areas in the wider region. Building a sophisticated road and rail network — and, just as importantly, improving the institutional arrangements to facilitate commerce — between India, the ASEAN and China might appear to be an overly ambitious enterprise, particularly given India’s own track record with major infrastructure projects. Adverse terrain has certainly contributed to the failure to enhance commercial interconnectivity. But Myanmar’s political turn, however plodding and fitful, offers an occasion to overcome the existing political and economic constraints.

The major political limitations have been the international isolation of the junta in Naypyidaw and the furtive competition for access and influence between China and India. The recent political opening is a game-changer, allowing India to establish its own terms of engagement. Complementing, rather than competing with China’s own projects, India can construct a corridor from Guwahati to Kunming through a neutral strategic buffer. The more advanced economies of the ASEAN would also stand to benefit. Should Bangladesh be included in such an initiative, the time required to transport freight by road from Kolkata to Chiang Mai could drop from 50 to 15 hours. In addition to roads, railways, ports, pipelines and power grids, a network would also require renewed customs arrangements, including an easing of restrictions on tradable goods, and improved border security.

The most significant economic constraint to integration has been inadequate financing for such a large-scale project. Again, the opening of Naypyidaw allows India to attract international funding for a major commercial corridor through Myanmar, not just from regional investors such as Singapore, but also from farther afield — Japan and South Korea. By framing this as a win-win for India, China and the ASEAN, India could also tap China’s impressive capacity and knowhow for large-scale infrastructure projects. China, reaching saturation point, facing slowing demand for infrastructure projects at home and seeking better access to Indian markets, could prove surprisingly accommodating.

Bangladesh is an additional opportunity for a regional commercial network, but also a potential roadblock. Although the Awami League government may be more accommodating of Indian entreaties, including Bangladesh means risking unnecessary domestic political opposition in India and gives Dhaka veto power over India’s larger strategic and commercial ambitions. Although efforts should be made to secure Bangladeshi cooperation for such an endeavour, it should not be treated as vital.

Thanks to the gradual democratisation and internationalisation of Myanmar, India is finally in a position to actualise its Look East policy. And there are existing templates for such a plan. Economists working for the ASEAN have developed a sophisticated blueprint, and Indian think-tanks have also been doing considerable work on the prospects of regional integration through Myanmar. But making the plan a reality will necessitate articulating a vision, securing the adequate international support and directing efforts towards an ambitious project destined to reshape the region. If done right, India would not only position itself as integral to East Asian prosperity, thus widening and deepening its strategic ambit, it would also consolidate its cooperative relations with Myanmar, the rest of the ASEAN, China and possibly Bangladesh.